tv Power Lunch CNBC March 9, 2010 12:00pm-2:00pm EST
payouts went down. these guys in washington are totally selling a product the country won't buy. i just thought -- i guess we don't have her camera. they want to send our taxes higher and yet at the same time they're not paying their taxes. >> no. i don't want to pay for it. >> we know. >> i want to earmark my own taxes. >> i'm with you. that's it for today's edition of "the call." i'm trish regan. melissa is getting read per "power lunch." >> i'm larry kudlow, and "power lunch" is up next. and welcome to "power lunch." i'm michelle caruso-cabrera, many happy returns since the stock market hit bottom one year ago today. what is the x factor for investors right now with goldman sachs' abby joseph cohen. he's the first of our market all-stars with answers about what to do now.
>> i'm melissa francis, shares of verifone up a whopping 450% in the past year, why the surge and what for the company ahead in the ceo will join us live. >> i'm dennis kneale. an e.trade ad has lindsay lohan crying like a baby. she is suing the company for $100 million. we will speak with lohan's attorney and ask is her reputation really worth $100 million. >> i wasn't laughing at her. >> and you called her lohan, understand lindsay. >> two-terms synonymous with stocks plummeting to the bottom a year ago today. what a difference a year makes, though. the dow jones industrial average, take a look, since then is higher by 61%, up nearly 4,000 points. the s&p 500 up by 69% as well, and 466. 1,075 for the nasdaq composite high are by 84%. that looks so easy in retrospect, right, guys? but what do you do right now.
joining us, abby joseph cohen, president of goldman sachs. good to see you again, abbey. >> welcome. happy to be here. what do we do? looking back a year ago, you should have bought stocks. can we say the same thing right now? >> we believe, of course, that investors are more comfortable now, but many of the dramatic opportunities, of course, were in place a year ago. the good news for investors is that market conditions will allow people to be investors. two reasons for that, number one, volatility is dramatically lower and, by the way, correlations between assets and within markets is also down. when volatility and correlations were extremely high, the only thing that mattered to many investors was to be as risk averse as possible. >> translation, when correlation is high, nearly everything is going down all together at the same time, but clearly, that has changed over the last year or so. melissa, you were going to ask.
>> it seems like stocks are way ahead of the economy so far. does that mean that the good news is already priced into stocks? >> well, let's look at it a little more carefully. clearly, the stock market is almost always a discounting mechanism. it almost always moves in advance of the economy, but we don't think it has moved too far at this point when we look at the work from our portfolio strategy team, they're saying that based upon our view of the economy which is below consensus for 2010, fair value for the s&p 500 is in the range of 1250 to 1300, so we don't think that we're there yet. the other way to look at it is on a multi-year basis and since the end of 2003 the gdp has expanded dramatically up more than have stock prices. >> it seems like the wall street pros are feeling a lot better one year later, but individual investors still haven't won back the faith. we seem still stung.
>> individual investors, interestingly, are not moving all together, but we are seeing some signs of improved risk tolerance. for example, in recent weeks there has been some movement with people taking money out of money market mutual funds and putting it into equities. that is one sign. we're also seeing that individual investors have been willing to look at some alternatives, for example, corporate bonds where they think that the yields are offering enough of an extra return over treasurys. our own view is that corporate equities probably offer better returns and better valuation right now when we look forward for the next several months. >> what do you think, abby, will we see the individual investor jump in when it's just a little too late and miss a big part of the run? >> individual investors actually have a pretty good track record and what we're seeing is a more gradual return to the markets and that's what our expectation
is. clearly, investor sentiment and investor psyche was very hard hit during the credit crisis and the recession and by the way, it wasn't just individual investors. it was institutions as well. the thing that is so important about my first comment, market volatility is back down to normal levels. so the markets are not as jumpy as they were and with the correlations also back down to more normal levels, individuals and professional portfolio managers have an opportunity to actually do their homework, do the analysis on company performance, earnings, cash flow, dividends and we think that this ultimately creates an opportunity for investors regardless of size to get back into the market in a more thoughtful way. >> okay. i keep wondering, because i tend to be an optimist and why am i not back at dow 12,000 and it's because there is a second tumble, a second recession and a double dip, what percentage
chance is your outlook on that happening? zero? >> i wouldn't assign a particular number. >> oh, do. >> as people say, never say never, but clearly over the last several weeks it becomes less likely in our view that there will be a double dip. we never thought that was the most sikely scenario. >> yet last several weeks, because of the jobs number? we're seeing the jobs number seeing somewhat less bad. it's still bad. we're seeing some progress in terms of fewer job cuts and we're also seeing that demand for things like new orders on equipment, retail spending and even stays at hotels and so on are beginning to improve. we think that many individuals are feeling less uncertain about their job prospects and that's critically important. as we discussed before corporations have been doing reasonably well. corporate cash flow has been strong and we see that many companies now have good balance sheets and they're doing several
things with them. one is they're upon propping up their own finances and they're engaging in corporate share buybacks and increasing dividends and that should make investors feel good and they're also using the money to invest in the future. they're investing in technology and more growth. if the s&p, you say fair value is 1300 to 1250, why do you think we're not there? what's holding us back? >> how far into the future do investors wish to look? last march, march 2009, we were telling investors that our investors were not willing to look more than two weeks into the future at that point, and they were very nervous about what they see. we now believe that investors are willing to pay for what they see right now maybe for the next month or two or quarter or two. by the way, at peaks of bull markets investors are willing to look two to three years into the future and maybe that's too far, but as we look at the end of
2010 that's when we come up with the fair value estimate of 1250 to 1300. many investors not yet looking out that far. >> abby joseph cohen, thank you for joining us. where would you put $450 billion in this market? in my pocket. >> not a good answer when you're on cnbc's stock market. see j.p. morgan's chief strategist upon. he has eye-opening predictions about this rally as well. >> let's get to the market action. the dow nearing 10,600 which say milestone for me. bob pisani is at the new york stock exchange. >> so will it be the financials or deep sick lcyclicals that outperform. the caterpillars and the bowings and all those stocks all did terrific on the air and ge and dupont up on the year. the laggards, you know, people don't think exxon mobil is a defensive stock, but it really is and when the markets go up notably and you get a big rally,
exxon mobil, exxon mobil is on the green line and the energy index is the blue line. exxon mobil underperforms and they bought xto a few months ago and that's been lagging, causing them to lag here. another defensive name, walmart. another laggard in the dow jones industrial average and walmart is the exxon of consumer stocks. it's a defensive name and there's a defensive name. walmart on the green line and it also always underperforms. a couple of groups here that are important. airlines have been strong all throughout the day as united airlines made positive comments about corporate travelers returning. i also want to know quickly, citigroup is up 7% here and there's a lot of talk about it. big volume here, and not any news here and i'll talk more in the next hour about what that means. bertha, how are we looking on the nasdaq? >> big news if cisco in the past hour and it's been a sell the news on the networking giant, but it's holding in at around $26 a share. cisco teaming up with at, with
download types and you can download "lawrence of arabia" in four minutes. among the big gainers have been the smaller guys like jdsu up 400% from a year ago. ciena, not withstanding the recent trouble, still more than doubled from a year ago. tellabs, also doubling. the networking index has been among the best performers and part of the reason has been the storage players that have been in that index. they're all doingel well. sandisk up 300% over the year and xts, seagate technologies, one of the best performers up more than 500% although it is off a skosh today. over to matt nesto at the nymex. >> thanks, bertha, very much. we had a push and the present crude on the day has been positive and it's been pretty much a weak day since we hit the eight-week high on the close yesterday and some intraday buying and trading within a very
tight trading range had us go positive. we didn't quite get to 82 and we got to 8191 was the intraday high that we've since pulled back a few pennies. at same time we see natural gas again making a second push to try to get off the bottom. it's been falling for nearly the past month giving us a three-month low yesterday trying to get a lift here today and we've got two inventory reports tomorrow and thursday from the american petroleum institute that are looking for continued build in supplies. that's what we're tracking here and let's get out to rick santelli in chicago. >> thanks, matt. we all know, we're waiting for the first of the coupon auctions this week. 40 billion in three-year notes and we'll go out the door at 1:00 eastern and we'll be here to cover and grade it. >> intraday ten-year note yield and virtually unchanged and the yields have been rising as we anticipate supply, but it is the
one-year anniversary of the stock bottom, so everyone is paying attention. look at one year ago on ten-year notes and they're on the 286 yield a year ago and we're up in the neighborhood of one pull percent. look at a one-year of the counterpart, the european ten-year boom. a year ago it was a smidge under 3%. right now it's 3.13. they really diverge from june on. now let's go back to michelle. >> two different observations by the market there about the u.s. versus europe. thank you, rick. straight ahead, three market gurus on why one year later, cheap clothes, cheese whiz and computers are the best bet for the foreseeable future, plus -- >> it's stock is up 450% within a year and turns the average iphone into a credit card reader. the ceo of verifone on how you can keep the change. j.p. morgan's $450 billian
man on yet 1-year-old baby of a rally still has growing up to do. >> and -- who's the bigger baby? lindsay lohan is suing e.trade for $100 million over name calling. all that plus "the fast money halftime report" waiting in the wings when "power lunch" returns. bull market or bear, traders are always hungry for ideas. they find them at td ameritrade. trading's all about strategy. and strategy... is all about information. so i start my trading day... with td ameritrade's morning perspective. that's interesting... or, look at this... i can mine their weekly webcast for ideas. this is what i need. of course, ideas are just the start. so now i can drill down. heat mapping... heat mapping shows me where the money's moving. 2,500 stocks... one quick glance. cold... cold. hot! right there. look at this-- pattern matcher... pattern matcher spots technical patterns, automatically. wow, look at that. look at that head and shoulders right there. it's like pattern radar.
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stocks are still king after all prediction of doom and gloom. a year ago the dow surged 61% since last year's low. let's bring in our all-star pan ole the best places to invest in stocks and bonds. joining us is allison deans. vince farrell, chief investment officer at so lay securities and both are cnbc contribute sxoors brian battle, director of performance trust capital partners. thanks to all three of you for joining us. over the past year i've heard a number of people say something like this is the time when the next generation of millionaires are born. it's after we see this huge downturn and people make smart bets or make some bets and then enjoy the upswing. have we missed the boat already if you weren't part of that group? what do you think, vince? >> i don't think so. you get a big rise, sideways move, maybe a 10% correction,
but if you look at the past historical patterns, the good market continues for several years to come, probably because we oversell during the bad times which i think we did this time around, so i don't think by any stretch of the imagination it's too late. >> allison, what's your best advice right now? >> i think you should stick to equities and a lot of people have put too much money into the existing income market and i've shifted it back although i think the markets will give you somewhere between 7% and 10% over the next couple of years and don't count on it making a millionaire and it will generate better returns for you than most of the other markets. >> it will do that even if the fed starts raising interest rates in the second half of this year? >> depending, if they do it gradually people will become less worried about inflation which could have a beneficial effect on the market although i think what the fed's more apt to do is a lot of different technical aks to reduce liquidity without dramatically raising rates because we need to see unemployment improve more than we have so far before we
see them raise rates significantly. allison highlights what a lot of folks say. stay away from fixed income and stay away from treasurys. do you agree with that here? not necessarily. the millionaires were made last year if you bought credit. we've had a tremendous tightening with credit spreads and that trade is over and there are pockets of opportunity in the bond market. there's a lot of slope in the treasury market and subsequently, going out the curve gets you extra return. but there are pockets like noninvestment grade mortgage securities where you can buy bonds that don't reflect economic values and there are spots we can still invest and you have to keep an eye on the fed and we got a great speech from the fed yesterday and they told us they would fool around with short-term rates and they'll be slow and gradual which gives you some confidence as a bond investor that the yield curve will look a lot like it does now. >> vince farrell, in terms of the party for stocks and what could kill it. if obama health care passes,
does that have an impact immediately on stocks or does it bring the market down after realizing it costs twice as much as we thought. >> yeah, i agree with you, dennis. it always costs far more than you expect, but they push the cost out so far because they don't want to have to deal with it now. so i don't think it impacts the market tremendously right now, you might get a correction and it expects the bill to not pass. a couple of weeks ago we thought it wouldn't pass and now it has a fighting chance, but i think the real cost is some years out, so i don't think it impacts that much. >> allison, one of the biggest issues out there is how do you get trust back for individual investors? they saw a lot of their money disappear and if they're not in the market when they hear stats like in the s&p, there are 204 stocks that are up more than 100%. if they miss that, they trust the market even less going forward. how do you build that trust back? >> think it's time and lower levels of volatility. i was listening to abby joseph co own the program earlier and volatility gets to more normal
levels and you have steady improvement in the stock market, i think over time people will build and have increased confidence and i think they have to feel better about their life situation in the state of the economy and what's going on in washington. i think the environment. >> what's your take? >> i think it is time. it's letting last year kind of pass by. if the unemployment rate starts to tick down people start to feel better and they say i have a job and other people are getting jobs and it's okay. >> that is one of the big issues that still lingers out there. i don't know what you do about that over time. maybe it is just over time. >> the scar forms and you'll forget and you'll be fine. >> up next, you can do just about everything with your iphone, it walks, and talks and crawls on the floor on its belly and now there's an attachment that lets you swipe a credit card on the iphone made by verifone and the ceo will explain all after the break. check out the performance of that company's stock, up more than 400% in the last year, 462%, in fact.
verifone holdings is off the charts soaring more than 460% in the past year, a leader in the payment industry the company recently unveiling one of the first credit card payment solutions for the u phone. from san francisco to discuss the new technology with us is doug berj ron, ceo of verifone. thanks for being with us, sir. why don't you give us a quick pitch on what this thing does that i couldn't do before. >> verifone already serves tens of millions of u.s. merchants in large retail, small retail, doctor's offices, taxi cabs, but we have found there's an additional 10 million merchants that don't have a storefront, they work from home or they work out of their cars or the people that fix your roof. the people that water your lawn, garden your house or they -- they sell avon or sell herbalife
protein shakes. >> if one of those people have an iphone, in theory, they can swipe their customers' card no matter where they are? >> we have several live customers doing this. they basically slip their iphone into this sleeve and then accept a credit card, very simply like this and what we have found is that these transactions have -- a lot of these merchants to record much higher ticket rates. their customers are happy to pay right then, they close the deal and the average goes up. >> my bookie would love this. isn't this a belt and suspenders, in the future won't i charge it by waving my phone and it would put the charge on my cell phone. we've made an acquisition recently in china that empowers 700 million chinese cell phone users to use their phones as
credit cards, but we live in an evolutionary payment economy and the u.s., credit cards will be around for a long time just as cell phones become initiating vehicles for transactions as well. >> i see your devices in the back of taxi cabs and when i can use my credit card i tend to tip a little bit better. what's the barrier to entry and what prevents other companies to copy exactly what you're doing? >> verifone's been in business for 30 years and although it looks simple to a user, these transactions have to be encrypted, they have to be pocketized and routed to a complicated bank network system run by visa, mastercard and all the banks. so it's a very difficult market for anybody just to get into, and there's a trust with verifone, we process all of the transactions today and we're pretty confident that people will be coming to us for this new technology. >> one last question, why do this just for the iphone? apple isn't the largest cell phone maker in the world, nokia is, why not do this for nokia cell phones? >> right.
we've announced already that we will have versions out by the end of the year that are already in design for much broader set of smartphones including blackberry, et cetera. you need some technology that's capable of signature capture, et cetera, on the phone, but no, we're not exclusively limited to iphone. >> you just wanted to start with the coolest phone. >> thank you. up next, time to go off the charts. we've got a stock that's up 80% in the last year and stick around, we'll give you the name and cisco has a new product that it says will revolutionize the internet. it was a bold statement. is that hot or is it just hype? we're going to tell you coming up. >> and then at 12:45 eastern time, get ready for "the fast money halftime report." what are you working on? >> we've got the buzz on the street of how the government will off load the big stake in the bank and whether or not to buy at this point even with a 20% run over the past month and cisco's big announcement and we're looking at the second
the oil giant looking to save costs in its refinery business and gmac financial services announcing its chief financial officer is leaving the company at the end of this month and human genome sciences naming david southwell as his cfo. he previously held the same title at sep cor and its shares have surged 500% from a year ago. >> now to a stock that's been off the charts and trading at an all-time high today. shares of visa rising 6% in just the last week. robert napoli is with piper jaffray. he covers the stock. good to see you. >> we just had the ceo of verifone and they have the new product where people will be able to swipe their card if you have an iphone. you can be paid with a credit card instead of cash. that's got to be great news for visa, isn't it? >> it is. i think over the long run, there are alternative payments, mobile
payments. i think you need a significant change in some of the technology in the united states to enable that to happen, so i think it's more of a longer term viewpoint. >> we all understand intuitively how visa makes money, right? everybody knows visa card, somebody swipes a debit card or credit card and they get a fee for every single transaction, but does that mean their growth is behold tone just more people using cards? how can they achieve growth on their own without just being -- having more and more people around the world just use your card? >> the fact of the matter is more and more people are using their cards and it's still -- while we've been using cards in the united states for some time, there's still good secular growth here, but outside of the united states you still have 20% growth on credit cards, and even in the u.s. people are swiping their cards -- you have 19% growth in the united states on debit cards for visa. so while they're on. >> can they raise prices, for example? not really, right?
>> once they were private companies not for profit, they came public and they have raised prices over the last couple of years. i think they're primarily done with the largest price increa s increases, but i still think you'll see pricing move up gradually over the next several years. >> last question. do you buy it here and any conflicts that we need to know about? >> there are no conflicts. that is one of the favorite stocks. we think they'll be able to grow earnings north of 20% for the next decade. so 22 times earnings with the cash machine. lots of opportunities so we should own visa. >> robert napoli, thanks for joining us. >> all right. cisco systems unveiling a next-generation router that it insists will change the internet forever. should you believe the hyperbole? let's go to silicon valley bureau chief, jim goldman. what do you say, jim? >> dennis, good afternoon to you. cisco did play a curious game of overpromising and running the risk of underdelivering.
it's a game apple always seems to play and well, so the pressure certainly was on today. cisco did indeed unveil the latest member of its router family and hardly just another back room networking box. this one packs quite a punch. three times more capacity than the predecessor and 12 times more than the competitor and super fast as video eats up more capacity. how fast, you might ask? cisco claims the entire printed contents of the library of congress can be downloaded in about a minute. every single person in china can make a video call simultaneously and any movie ever produced can be streamed in under four minutes. john chambers says in a webcast earlier today this is a game changer for cisco and its customers. >> it is truly a tipping point on the roll of the internet will play in the future and when you think about that, we will partner entirely with service reuters, never compete in that environment ask say how do we jointly bring this to life? in my terms, it's simply the
network, simply cisco. >> simply the network and siskly sichl owe. that looked off the cuff, didn't it? it is already in trials and other service provide verse been clamoring for this kind of speed. google made plans for a high-speed broadband network of the own. cisco's hype and news today, that seems to be sending the message that network service providers will now have the tools to take on that threat. more on the blog, techcheck.cnbc.com. dennis, back to you. >> thanks very much, jim. only six points away from dow 10,600. meanwhile, you've probably seen the e.trade ads with the babies talking about the market. they're hiysterically funny. one celebrity thinks it's slanderous. >> the ad has a milk a-holic baby named lindsay on it. how can they make $100 million. hasn't she already done that to herself? we'll see if she has a cake. we'll be right back. >> lindsay?
portfolio. >> lindsay lohan is suing e.trade now for $100 million. come on! on claims the super bowl ad you just saw is modeled after her. lohan's lawyers the actress has the same one-name recognition, are you ready, as madonna and oprah and that they intentionally used her name as a parody of lohan's life. lohan's lawyer is still in court. the moment she comes out we'll be speaking with her directly, but first up right now on "power lunch" e e.trade told cnbc they're not able to comment on the case because they have not seen the complaint. here is darren traub with the law firm of harry bronstein in new york. >> thank you for having me. >> we have a lot of questions about this. >> where do we start? >> let me start with $100 million in damages, i guess, done to her. how is that possible given what she's done to her own image? how would you possibly get to
that number in all seriousness? >> think, frankly, this is just a case of a celebrity being a celebrity and just trying to get free publicity and of course, a number like 100 million certainly does grab, you know, grab newsline attention, but i just don't think she can prove even the first hurdle that they misappropriated her name -- >> think about it, would that joke be funny if you used the name gertrude? if that joke had been funny if she hadn't been arrested multiple times for drunk driving? >> here ate thing, as a viewing consumer, i've seen the ad dozens of times and never once made the connection to lindsay lohan. >> that's because you're not hip, sir. >> no, no! i guess the issue is that she's known in the, you know, in the press as lilo, as lohan and lindsay lohan. >> what is the metric? we can think of people like oprah, elvis, madonna, those are all one-word -- prince, one-word
people. how do you know when you've gotten to one-word status. is there some legal precedent out there? >> there's different ways to prove it. she could do a consumer survey to see whether or not people recognize the name lindsay and associate it with lindsay lohan. >> is that done for court cases? >> absolutely. one of the first things that you do when trying to prove a misappropriation especially to prove that one is famous. you get a consumer survey to say look at the general public and the percentage of the public that recognizes the name lindsay with lindsay lohan. >> you know, my question, maybe it is more for you guys than it is for darren. we're all talking about e.trade. so in that sense you've got more people viewing the commercial, but does it encourage people to go trade with e.trade? does it achieve what they're after? >> provide brand recognition is a good thing except it's wrapped inside the fast food restaurant, but i've got to think it's good for the brand overall. for lindsay lohan, one thing
that we're not making -- this is a young kid who has had her share of personal problems and now a major advertiser is making fun of it and there's something, at least in matters of taste. >> no. no! >> i think one of the problems that miss lohan's going to have is that e.trade is trying to soesh yat milkaholic with miss lohan's personal problems. >> oh, come on! >> no wonder you're good at being a lawyer. >> yeah, come on! >> thanks for being with us. >> thank you. they'll get a survey on melissa. >> still ahead, he runs $450 billion. we'll bring you the best investing ideas for the next year with chief market strategist of j.p. morgan funds. plus, you want outrage? we've got outrage. how about federal fchl employees who don't pay their taxes. yes, we're subsidizing twice. you'll hear from a congressman mo wants them fired.
up next, melissa lee and the gang with "the fast money halftime report" halftime report. >> are you melissa or she's melissa. >> i know. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here. host: could switching to geico 15% or more on car insurance? host: is ed "too tall" jones too tall?
inching higher and there are names in financials, tech and fast food breaking out as we speak. let's uncover them for you. time to get the word on the veet. your crew today, the pit boss, pete. >> areian and steve grasso and patty edwards from storehouse partners. first of all, we have to say happy birthday market bottom because today is the one-year anniversary, the birth day of the market bottom. we are not moving too much, but take a look at the move in citigroup, off the session highs right now and still surging up by 6.7%. steve grasso, i know you've been in the name since about 3.25. >> higher than that, yeah. >> what do you make of this breakout higher? >> one fund after another we say soros buy it and bruce buy it, that's all positive for the bulls here and i do sea buy side interest. >> all right. what we're hearing from the street in terms of the walkout period it will expire on the 23 rtd of march and this is from bank of merrill source there,
the government saying it will be handled by the money versus the normal block procedure. so they're not looking to dump a whole bunch of stock on the market all at once. the allotment should be a little bit smaller than in the past during a normal block from seed you are. mike gurhka, what do you make of that? is that a positive? is that a reason to buy the stock now at about 380? >> think what it really is is it's a reason to keep an eye on global banking as a whole. right now in the u.s. we might have an anniversary today, but we have a global problem and what happens with regulation in banking and right now this is a clear shot in the arm versus regional banks and i think you will start to see the spread on a global perspective starting in europe and making its way through asia? >> i get that n terms of the global problem. in terms of a trade, pete, when the lockup expires in the government owns a 20 plus percent stake and even if it will sell at the market in smaller increments is that a reason to buy the stock because
there are people in the market apparently who believe that is a reason to buy? is. >> you're 100% right. if you look at stock volume today it's covered the normal three-month average and you look at the options absolutely exploding to the upside and where are they targeting it, melissa? they're not buying puts and everything trading today is on the call side. march, april for calls, extending further out. people are excited about this and they feel like it will be a nice, methodical move for them and because of that maybe citi is red for a complete breakout, not just today, but maybe some followthrough and certainly the options markets are looking to go much higher. in in terms of the call activity, that's a great point, but we don't know if people are buying or selling the calls. people are looking to be called away on the stock at some price higher in march. >> that would be true except for the fact that i am noticing that they are buying. they're buying on the offer and that's where the majority of the activity has been all day. it is at the best ratios at
11.7%. back in '07 it was at 7%. so there was a great fortune article that you should look at as well. >> i want to bring in patty as well. we have a headline that barclays is looking to expand the u.s. retail presence by purchasing a bank. patty edwards, from your perspective, you have your pulse on the consumer here. is this a good time to expand here? would you say that that's a good move for barclays given the troubles that the u.s. banks are having here in this market? >> well, you know, if barclays can come in and can give the right distribution, get the right credit card portfolio, then it probably could be a good deal for them. the question is who are they going to pick up and they'll have to go looking at some of the regional banks. some of those regional banks are still pretty cheap and there might be something to pick up there. >> i want to go to the chart of the day, of course, we mentioned the bull market anniversary. the volume on the nyse and we've noticed this for the past couple of sessions and today also, trickling well as each day of the year passes, grasso, you
feel it down on the floor, i am sure. yesterday was a record low and it looks like we're on track today. >> volume as a whole and it's not just the nyse. volume has a whole has cascaded lower and we're off 10% to 20% on the market basis. fund managers are confused. is there anyone sure that knows in which direction of the market is going and the answer is no. there you go, light volume. >> let's talk about cisco, and we were all waiting for the much ballyhooed announcement, a much-anticipated routing system that it claims it will change the internet forever. if you missed it, a 7% run-up in the shares ahead of the, and brother of pete, is on the line, dr. stocks, cisco, not moving much, but the plays that you're looking for. walk us through your thinking on the trades. >> i would say the internet experience is going to benefit stocks like apple, contend
provide, deliverers. apple does both with itunes and app store. i think there's a reason we're also seeing apple rally today. cisco's news is one of those. netflix should be a potential beneficiary, as streaming video delivery over the internet. if this is at least three times faster than cisco's fastest router's now, that's a very good sign. google, because nobody serves more ads than google, between youtube as well as the ads on google, i think, those three are three of the biggest winners. there are others. microsoft, bing, yahoo! other parts will continue to be entertaining, as well as enriching, going forward. >> right. >> the first three are big cap stocks that i'm focused on. >> dr. j., thanks for that. pete, acami is up. they make internecessary experience faster. is that a beneficiary? also storage names do they
benefit as well? >> i guess you'd have to think so. as a matter of fact, look at somebody like a q. logic, we've talked about network appliance, emc, western digitals of the world. q. logic trades 400 contracts, it's traded 17,000. all targeting the 20 strike in both march and april. plenty of activity out there. looks like somebody who may be a beneficiary for sure. when you talk about akami, you're talking about acceleration. they handle so much of the internet traffic. you've got to like that name. each and every day it continues to go higher and higher. still at a fair value stock. >> got to move on here, talk about what is topping the tape. fast food stocks, burger king shares up 3% on its february sales. yum up 4%, after an upgrade from ubs. interesting, because burger king doesn't have as much international exposure as a yum or mcdonald's, which benefitted from mcdonald's news yesterday,
yet both are surging. patty? >> part could be we saw a downgrade of cheesecake factory. is the consumer trading down again? look at what came out of mcdonald's numbers there is some concern and i share that concern the consumer's still not strong. it's a about the better way play to get the international exposure. >> plus lagers in the group, sonic and burger king, they are benefitting from that. and it could have been a -- an a anoma anomaly. clients that i see are looking for the laggards to catch up. >> burger king is say, you know, that they should be blaming the weather for this february sale. mike in terms of international exposure, do you think it's a better way of playing the fast-food group. burger king, most international exposure is germany, an economy which is -- >> i think it was mentioned, more of a price point to the
extent maybe this is an international call that you're buying here because of that. i think there's more upside with little risk because where they are at. i like the global leader. you know who the golden arches are. demand is continuously exceeding here in the far east. that's one of the reasons why this should not stop on the story line least for the second quart. >> look at darden restaurants, up over 21%. burger king is flat on the year. guys are betting this is going to catch up. is it tomorrow? maybe not. but there's firm upside potential. >> the mixed smoothie should be released this year. mcdonald's ceo is lunching with president obama. we don't know what is on the menu. hopefully more than a dollar item. let's move on, stick with the consumer. a melee of mall stocks. j. crew, reporting in a few hours. patty what do you do in this small window of time ahead of the report?
>> j. crew, they've got the look. they've got the consumer traffic. i don't think there's any way that you're going to i have problem with their numbers when they come out today. they've been on fire. i would be long j. crew going into this. i'd be long aeropostale, much more of a value play. hasn't had the love. much cheaper stock. >> do you have shorts with critters on them? >> i do not but i have a buckle from the buckle. patty does as well. i think that's another one of the names that's efficient. they know what they're doing. inventories keep track of it closely. valuations are fair. keep an eye on. >> buckle from the buckle. we've got to take a break on the "halftime report." after the break on "power lunch," is the pentagon trying to outmaneuver the irs, cracking down on federal employees who don't pay taxes. a look on tap for 5:00. with bull market year one in the books, "fast money" looks to
the future from your best bank bet to tomorrow's leading tech stock. find out how to trade the next 12 months. media wars began with a bang. and they're just beginning. from the old school network to the hot, new upstarts, we'll show you how to play the epic content clash tonight at 5:00 p.m. eastern on cnbc.
let's call the close. mike? >> just took out 1144 in the s&p, that's key for me. i'm a buyer. i like the nasdaq. >> aeropostale, buy it. >> grasso? >> buy the market, visa. >> pete? petey? we're having trouble. tune in at 5:00 to see what he would have said. >> i bet he would have said clf, and buy the market! >> probably. see you tonight "fast" at 5:00.
>> we have a lot coming up here. thank you very much. in the next hour of "power lunch," cracking down on the growing problem of federal employees not paying taxes. plus a whole lot more. he's in charge of a half billion dollars and telling his clients this bull market, it's a youngster. the reasons why and how he's cashing in, coming up. washington versus wall street. lawmakers pushing to put 50% tax on bonuses for companies who took t.a.r.p. dollars. populism gone wild or real reform? a "power grid" tonight tap. the truth about home prices, federal workers who are stiffing uncle sam, and a sign that sex doesn't always sell in a recession. the second hour of "power lunch" starts right now. welcome to the second hour of "power lunch." i'm michelle caruso-cabrera. citi and sprint your biggest movers. both higher by better than 7% higher. >> i'm melissa francis.
hoping to hear from lindsay lohan's lawyer about the star's $100 million lawsuit against e-trade and her milk-a-holic look alike. >> i'm dennis kneale. one congressman is cracking down on the growing problem of federal workers evading taxes. hampton pearson has more. >> dennis, looks like federal workers and requiretirees may b biggest tax deadbeats, owe more than 3 million based on data from 2008 from the irs. the office of personnel management and the department of defense tells us in that total, there's 276,000 current and retired federal employees with 100,000 employees on the payroll today who owe $1 billion in back taxes. one lawmaker thinks a crackdown on government tax cheats should be at the top of any deficit reduction plan. utah republican congressman has
introduces legislation for firing federal workers who have serious delinquent tax debt. >> i was shocked by the numbers and number of people. we have about 100,000 federal civilian workers who fall into this category. nearly 700 of them working on capitol hill between the house and the senate. and so you have a billion dollars in uncollected taxes from that category of people. and at a time when these federal jobs are good-paying jobs. it's just strikes me as wrong. >> last month, president obama lashed out at basically businesses with federal contracts who have not pay their taxes. the congressman says if democrats want to turn that into legislation, his bill as far as targeting federal employees not paying their taxes, would be a perfect add-on. back to you. >> dennis, i see the steam coming out of your ears. >> a story in the "wall street journal" on anger. the six different kinds of anger. i'm feeling all six with a story
like this, when the feds have been so bitterly critical of wall street and contractors that don't pay their taxes. 100,000 current federal workers. >> is it fair to fire them, though? would you want to fire one of us for not paying our taxes? could you fire an employee? i'm not sure on the connection. >> depends on the degree and still, in the end, you work for the federal government. >> right. i hear you. >> you ought to pay your federal taxes. >> this is a slap in the face. this worse when a private sector worker tries to diminish his tax -- >> why? >> because they require -- they rely on tax receipts for their own pay. if ethey evade their own taxes they're hurting their own pay. it's more diabolical. >> they're getting subsidized twice by the taxpayer. >> you can nominate them all for cabinet post and check their taxes in order to -- >> it's a big revenue generator. it has been in the past. >> go ahead. >> isn't that what happened with geithner?
no, i'm not supposed say that. >> abby joseph cohen, she thinks volatility is back. >> market volatility is back down to normal levels. so it's -- the markets are not as jumpy as they were. with the correlations also back down to more normal levels, individuals and professional portfolio managers have an opportunity to actually do their homework. do the analysis on company performance, earnings, cash flow, dividends. and we think this ultimately creates an opportunity for investors regardless of size to get back into the market in a more thoughtful way. >> misspoke earlier. she did not say volatility's back. she said volatility is back down. >> big difference. >> another check on the markets now. $450 billion man, david kelly, chief market strategy with with jpmorgan funds. welcome back. >> glad to be mere. >> abby joseph cohen said you can invest with stocks today and still make money, do you agree?
>> absolutely. this is a young bull market. it's a yearling. it's 1-year-old. the average bull market lasts for five years. we're up 70% from the lows. the average bull market goes up 176%. i agree with abby, not just from microlevel doing the fundamentals but from a macro level. we've got an economy putting the pieces together for a long expansion. if you think, over the next five years, we're going get back to full employment a lot of money made in stocks. >> this bull can't last five years, can it? as soon as the fed starts to raise the rates, stocks tumble. >> there will be corrections along the way. there have been over the last year. we've had i think five corrections now, 5% or more. but stocks are still relatively cheap. it's important not to time corrections. yes the federal reserve will have to raise interest rates to more normal levels but so long as the economy's generating good economic growth and profits are
rise, confidence will return to the economy and that will push money back into stocks. >> the labor market hasn't recovered. there are a lot of other things. some people are wondering if we're going to continue to see expansion in gdp or a double dip. the stock market is way ahead of the economy. is that true? is it a problem? >> well i think the average individual in the economy doesn't believe it yet. jobs always lag. but, first of all, we do see multiple signs that the job market's about to produce jobs. wait for the march employment report in april, it's going to be a good one. we've got so much pentup demand, vehicle sales running at 10 million unit, housing starts at 600,000 units. those numbers are way low and they have to back up. we have tremendous pentup demand which will give us an expansion. >> give us specific. you say the bull mark is young. a year ago you could have bought almost anything and made a ton of money. i doubt it's not as easy now.
>> it's not easy now in terms of making big gains but psychologically it seems easier. i think you want to take advantage of global growth, technology in particular, taking advantage of growth overseas. also consumer durable areas. i think we will see stronger vehicle sales. we will see a rebound in housing activity. so, you know, i'd be on the higher beta stocks here, take advantage of a cyclical rebound. people still haven't bought into. >> talk stocks, allocation. a lot of us were 60%, 70% in stocks, then came the meltdown, then you told us to, 10, 20, 30%. do americans have too little money in stocks, is it time to add ten points to your allocation? >> generally, individual investors need to make small bets. i think of an overweight as taking normal low indication, adding 5% to it. i wouldn't go too wild in this. something could go wroung wrong.
>> how do you build back the trust? are they feeling a little bit better, having seen where the stock market has gone? >> i talked to lots of individual investors, and there is not much trust out there. i think the key thing here, though, the economy has to prove itself first. i think when we begin to see those job gains, i hope, starting in march and building over the course of summer that will do more than anything to build confidence in the economy. it's ultimately confidence in the economy that's necessary to rebuild confidence in wall street and the markets. >> but that might be too late in the market, right? you're saying they need to see the economy improve, by the time the economy catches up all of the gains will be out of stocks. >> invest now, based on logic rather than waiting to when it feels good. when it feels good, it's time to sell. >> sentiment is one thing. we 9 trillion on the sidelines. >> absolutely. and that's -- i mean that's -- it's because people have been depressed by the last decade that they are reluctant to get
into the market. that doesn't stop people from thinking logically here. people will be depressed and it will take a while to fade. but that gives people an opportunity. you know the train's not moving that fast. you can still hop on board. >> s&p 500, 1144. when we have you back a year from now for the two-year birthday, where are at? >> i mahate making one-year prediction. at least up 10% total return. i'm hoping up by 20% or more. >> wow. we hope you're right. david kelly, thank you. on "street signs," they're focusing emerging markets, are they overdone? if so, is it time to buy american. let's check in with our market reporters and see how the markets are doing now. bob pisani at the new york stock exchange. >> reporter: let's me bring you up to date on citigroup. i mentioned in the last hour, big volume, heading towards 700 million shares, likely to be issuing a preferred offering be
possibly tonight, $25 par. was sort of expected. we don't have exactly the ranges. dow jones talking $2 billion. they're trying to figure that out. par will be $25 on that. again that wasn't unexpected but likely prices tonight here. let's move on. talk about financials. they -- the big commodity names the big movers throughout the year. bank of america, american express, citigroup, jpmorgan, goldman sachs, moving nicely here. we'll take a look at how the international market is doing. you'll see impressive numbers there, as well. important thing is financials are the key to earnings this year. we're expecting big things from financials. they better start outperforming here in terms of the earnings or we're not going to see stock price gains. fourth quarter 2009, 7% of the earnings of the s&p 500. in 2010, they'll be more than twice that. in other words, big moves up in earnings what we're expecting here. bank of america, look at that, $3 a year ago. $16, almosts is 17 this year.
so the important thing is they had a loss of 29 cents last year. we're expecting them to have nice gains, about 82, 38 ce83 c. rick santelli? >> we just completed a three-year note auction, my great is a b plus. some think it should have been an" a." a like to look the yield, 1.43. look at the w.i. traded today, most of the setup of the auction waited until an hour before the auction. it wasn't though as anybody was chasing it. 51.8 the indirect. 3.13 bid to cover is very strong. last two times we had a better bid cover, only two in recent memory, november '09, may of '98. look at direct bids and this bug me a bit, ten auction average 9%. this was 10.3. if that disappears, we're going
to have a bit of an issue. b plus. on the one-year anniversary, look what the size was a year ago. this auction was 40 billion. a year ago 34 billion. now, let's go back to the anchors. >> thanks, rick. >> the president meets with the greek prime minister moments from now. greece blaming speculators for their problems. should the u.s. help europe crack down on speculators? we'll have both sides of that debate. we have 21 new stocks of the s&p 500, new 52-week highs today. mattel, starwood, boeing and pepsico, all still in there.
welcome back to "power lunch." the nasdaq in the last year has been the best performer or of the major indices up 85%. cisco has come off of the sell-off we saw on the news. a yawn on cisco's news. a yawn on apple's ipad news, too, didn't we? apple today at a fresh all-time high, 224 a share. over the last year of the megabig caps and the nasdaq 100 apple has outperformed. it has gained twice as much as the nasdaq 100 overall, up over 160%. ebay up over 140%. internet guys have been the best players. today, trading well, as well.
internet stocks holing in, it's one of the best performing sectors overall. microsoft and cisco have paced the nasdaq composite and the nasdaq 100. up 89%. qualcomm down today, up 18%. take a look at ten-year performance, tomorrow is the ten-year anniversary of the nasdaq peak, off 50% from there. take a look at apple versus cisco. that's where you see how the leadership has changes over this last decade in terms of their performance. we'll talk more about that coming up on "street signs." but now back to you in the studio. >> thanks so much. the greek prime minister meeting with president obama today at the white house. he says the u.s. cannot afford to ignore the financial issues facing greece and the euro and recently compared currency speculators to arsonists. greece's finance minister appearing on "squawk on the street" earlier this morning reiterating those points. >> greece is doing what it should be doing to cleeb clean
up its own mess. there's a broader problem a european problem it has to do with the euro and it has to do with speculation, all earns that interest the u.s. as well. >> will more regulation help solve the problem or is it too little, too late? a difference of opinion from john carney and, john, i think -- speculators get blamed for a lot of things. rather than blame the bad driver who crashed the car into the tree, blame the guy who bought hoor insurance on the driver. >> right. it's absolutely crazy. greek owes its entire ability to stay out of default on its debts to speculators. who else is buying greek debt except for speculators. >> great point. what do you think? >> let's get real here. the root problem is that the greece -- greek economy is running a budget deficit and it's a debt level of 110% of
gdp. i think it doesn't make sense to blame the speculators but the speculators have two important effects, first default. day of reckoning had to come but they make sure it comes much earlier. second they take away the option of adjusting slowly. they make the economy just that much faster. of course the pain is going to be much greater. but to blame the speculators for the root cause i think is incorrect. >> why is it a bad thing that it brings the day of reckoning forward? bring the day of reckoning forward it's painful but it's often cheaper instead of lending and extending. >> it's absolutely correct that this prevents a problem from fess terring further. if speculators had not caused the problem if they did, you could have the greeks continuing to build up more debt and this would have made the problem worse when the day of reckoning did come. the iron is whethssue is whethe fuel to the fire. this was a problem that could
have become smaller if the economy started recovering. >> i think that what happens is rather than adding fuel to the fire, the speculators in this case helped put out the fire. the ancient greeks had a word which meant out of control. and the greek government spending was out of control. >> but they put out the fire by soaking it with gasoline. >> right. >> we heard eshaw go over the bad things that happens. the new debt has a higher interest rate because of what the swaps did. >> i think it's working the opposite way. without the swaps in place, people would be afraid to take on the debt. the swaps actually allow people to hedge their positions. >> but what about the cost of that debt? >> it also indicates to people what the risk is. spreads would be more volatile without the swaps. >> greece went to market. they had to pay a huge spread over everybody else. if the swap market didn't exist,
do you think that spread would have been any smaller or would they still have to pay up so much? >> they would have to pay a fairly high premium. >> bingo. >> they're getting a backing from the euro zone. we know that greece is not allowed to go down the tubes. >> but the cost of their debt noise different. you think the cost of debt was no different regardless of whether swaps exited? >> might be cheaper because of swaps? >> i think at this level of premium it's the longer term institutional investor going in. i don't think it's the speculators buying into the debt at this rate though the presence of default robs. given how much risk is prices into the greek bonds right now, i think it's a fair bet that the investors don't need any further backing. >> yeah. just to get in there and try to argue the opposite side a little bit, john, i mean, there are a lot of cases where you see traders that are trading credit default swaps create false alarms. we saw that with a lot of banks
that weren't in as bad trouble where spec laters and credit default market went in and started making a problem that maybe wasn't there and wasnthat a whole lot worse. >> you get a temporary blip. but if the swaps are selling -- if credit default swaps are selling for enormous amounts people pile into the market, like they do any overpriced mark. >> trying to solve a different kind of problem. one of the reasons why it became debell debilitating, the rating agencies would do the downgrades. you know how you solve the problem. you get rid of the stupid laws that legislate profitability to the ratings agencies and say, you know what, it doesn't matter what the ratings agency say. >> we have to take the ratings agencies out of the game because they've proven incapable of doing it and a lot of that
because they have leaks in legal oligopolies and there t. makes it impock to pocpocssible to d correctly. >> see, problem solved. >> there reason what mr. papandreou says resonate, credit default swaps make a bad problem worse over time. but you have to deal with the source of vulnerability. more transparency, having more instruments traded on open exchange exchanges keep this from making a bad problem worse. >> we're in a scary am of agreement here. >> that's why i'm trying to get on the other side for a second there. wasn't very successful. maybe the prime minister should focus on reducing debt or spending a little bit instead. fun discussion. up next -- a good sign on home prices. fewer homeowners having to cut their prices.
losses as we've seen the dollar soften up. the weak dollar trade backed off a little. almost unchange at copper at 3.40. longer term resistance at 3.50. the china story, demand story one that's questionable day-to-day. all of the base in industrial metals if you will, look week today. precious metal side of thing, gold is down just about a buck now. also call it little changed. but the intraday chart will show the volatility in the paring of the loss after hitting two-week low of 11.08. it has firmed up. it's been drifting. lastly, check out sugar. it's at a seven-month low today. the crop yield, i understand, is going to be good. that's not necessarily good for prices. you can see 2050. back to you. >> thanks, matt. new survey finds home sellers are getting more
realistic with their pricing. diana olick has more. >> that's right. they're not in the driver's seat yet but home sellers are feeling less pain this month than last month, perhaps because they are getting more realistic about home prices. a new survey finds 19% of listed homes have seen a price reduction. that's the lowest level since they began doing this report last april. and the first time the number has fallen below 20%. p the peak was 26 lars fall. california leading the pack with the lowest share of price cuts in march 16% in san francisco, 13 in san diego, 12 fresno. could be the market is flipped there. no, on the price side, milwaukee at 33%, phoenix 31%, femme memphis, tennessee, at 31. winning the biggest prize for the biggest improvement, charlotte, north carolina which went from 29% of properties with price cuts to 21%.
are sellers simply getting more realistic or are prices stabilizing and demand improving? joining us the v.p. of marketing, heather fernandez. answer the question, is it realism or is it improved pricing? >> frankly i think it's a little bit of both. what you're seeing in the market, look back at 2009, 2009 was about desperate sellers. if you didn't have to sell your house, you didn't in 2009. you priced irrash alley and priced to price cut. 2010 it's about the rational home buyer. a lot of the desperate sellers moved out of the market or moved through foreclosure. pricing homes for realistically. i think there's a lot of opportunities out there for patient home buy who have been waiting on the sidelines for a long time. >> let's talk for a second about the tax credit as well. we thought it was expiring in november. it was only first-timers then
expanded to include step-up home buyers but not for 8,000 but 6500. do you think the tax credit is helping with buyers and sellers who see there's that extra bit of pricing power? >> it's a great question. i think definitely the end of 2009 we saw the impact of the tax credit. sellers started aggressively pricing towards the end of the year trying to make that november 2009 deadline. 2010 we're seeing less of an impact where it seem likes most of that demand that was spurred by the tax credit got moved forward to 2009. 2010 seems to be a more rational environment with less of an impact from the tax credit. >> going forward, we've been talking about what happens when the government pulls out of the housing market. that is, the tax credit expires, fed stops buying mortgage-backed securities and mortgage rates go up. does that mean that you expect to see perhaps a double dip in home prices, as we get into summer and fall? >> it's interesting that you ask
that. we're seeing a surge of interest on trulia.com as more home buyers are doing more research. mortgage rates near all-time lows. on the flip side, we're seeing home owners in a world of pain. 1 of 4, most of the data shows, unwater. 1 in 3 transactions from distressed sales. so there's a lot of uncertainty in the market but it does feel like most of the pain was wrung out in late 2009. and while the tax credit doesn't appear to be impacting pricing today, it seems that mortgage rates, you know, as far as we can tell, are going to remain stable. >> we'll leave it at that. heather fernandez, thanks so much. >> thank you. coming up on the half hour. time to head down to the floor of the big board, get steve grasso's forecast for the market action. oil and gas prices creeping up. we have an exclusive interview with a ceo.
middle east calling censorship counterproductive. airlines' on-time performance improves. continental airlines will cancel flights rather than risk stiff fines under new federal rules designed to punish carriers in late departures at crowded airports. the cambridge energy research associates conference is kick nauf houston. sharon epperson has an exclusive guest. >> i'm joined by the ceo of italy's largest oil and gas company. the ceo of eni. you join us here on oil day. but one of the big focuses of your presentation will be on natural gas. it's fascinating to me that here at this conference the buzz is on natural gas, even as we look at oil prices here at $80 a barrel. why is there such a change here? >> the fact is that while oil is stable between $70 and $80, gas continue to go down and today prices are one-third of where they were only a couple of years ago. everyone is wondering, what is
the future of gas. this is the theme i'm going to discuss today. >> specifically, for eni, you see the future of natural gas and unconventional plays not just here in the u.s. where you're in the shale but also globally. >> oh, yes. we came here, we made an investment one year in the gas shale in order to understand the business, get technology and apply the business in other countries where there are immense deposits of gas shales. >> as you look into gas shales elsewhere, where are the countries that you're focuses on now? >> we think our first would be north africa because europe might have gas shale but the population in europe makes it difficult to explore them. >> one of the other issues that you're dealing with in europe and many european gas companies are dealing with this, that is in terms of of international gas pipelines and you had to offer to sell three of them in order to quell some of the concerns
from the european union about not being as competitive and monopolizing the industry. do you think you've quelled some of the concerns at this point? >> we had a long inquiry an behavior we were supposed to have before 2004. we had an inquiry of the european union. in order to close the whole problem, we offered as a remedy to sell three international pipelines that we have in europe. we would be setting pipelines in the next few months and the whole thing would be behind us. >> this is melissa francis. real quick, in the "wall street journal" today there was an article talking about how we might not see a spring oil rally this year. we always see oil rally at least for the past six years this time of year from the spring low into the peak of summer. do you believe that, that this might be one of the first in a long time we don't see it go higher? >> i've been surprises in the last few months how high has
been the price of oil. we personally thought that the price of oil would have been much lower. so i'm not expecting much higher prices for the future. >> even with what we're seeing in nigeria, which is, you are the largest producer in africa of oil, do you see the security concerns there and the militant uprisings, a lot of times people say that geopolitical event is what is going to take oil prices higher? how do you assess the situation there right now? >> nigeria has been home for us in the last 50 years. so we have been always concerned about security but we found ways to solve the issue. today, the situation is better than it used to be only a few months ago. we continue to invest in the country, nigeria's an oil-rich country. we think that most of the problems can be solved with our presence. >> so it won't be a disruption in nigeria that sends oil prices higher? >> i don't think so.
>> i was surprised to hear you talk about investment in natural gas. it has to make more investment there's pretty tricky. how do you just to the fluctuation and the wild volatility we've seen in natural gas prices? >> the investment we made here in the u.s. has been quite limited. there's been an investment made more to learn the technology, the technique, rather than to become a player in the gas market in the u.s. for all of the other investment in the world, there has been a standby as far as gas is concerned because prices have been low. we expect prices to pick up again in the next couple of years. >> we thank you so much for joining us here to talk about this. again, we're going to be talking more about natural gas and about some of the other ceos' views on where oil prices are headed coming up later in the programming. back to you. >> thanks so much.
for more on today's market moves, let's head back down to the floor of the new york stock exchange where steve grasso of stuart frankel is standing by. >> i thought the italian power on the bottom the screen was for me. >> you're very pressing about these markets, and you also have a faith, a heap, and lately, you've kind of lost some of your hope and i think you missed out on the run-up. you were timid. >> i definitely was timid and i'd rather have all of my appendages to accounted for. i got bullish at 1125. i think that was a prudent measure. at this point we could get sticky, 1145, 1150. but the door is open to 1200. forgetting views of politics, the market's going higher. >> the door is open at 1200. what is the key level? i like 1150, i like round numbers with zeros. >> that is the key level. 1145, 1150, i think as i said before could be the struggle for the bulls.
i was looking at the lack of volume was probably a negative for the market. but now i'm starting to think maybe it's a positive that not everybody's on board with this bullish run-up. so you get people late to the game that can be the catalyst, this market going towards 1200. >> we keep waiting for the ice to crack beneath us every time we take another step out here. with the dow, down 10600. up above that. is there much significance? i like it. >> i'm not a dow follower. you know, i take all s&p. but significance is being above 10,000 in the dow is extremely a great mental level for people who invest. truth of the matter is, we have so much unknown out there. but the momentum right now is in the bulls' favor. so i think you could see a great number on thursday on the jobless claims. we're going to be looking at jobless clae claims retail sale. when you see it come, you've got
to be selling. when you see it trade higher you have to be buying. you have to be buying the market now. >> the italian stallion, steve grasso. a vote scheduled today on a bonus tax. the senate bill, slap 50% tax on bonuses for the highly-paid employees of wall street firms that got t.a.r.p. money to save the system. >> is this a smart move or populist politics? sparks will fly in the power grid.
international brotherhood of electrical workers is suing sax. rather than shareholders be responsible for charitable contributions to fend off publicity. goldman says the suit is without merit. it's pension funds, so stock hole have not happy the stock has skyrocketed. >> from 160 -- >> they want to sue, want bonus money back. >> right. they made far more money on the stock rising. >> speaking of compensation, the senate could be voting on a bill to slap 50% tax on bonuses. this would apply to high earners at wall street firm was receive more than $5 billion in t.a.r.p. money. is a bonus tax a good idea? squaring off, former clinton white house staff somewhere j.d.
hayworth. you both have 20 seconds to make your case. david, a good idea? >> three points to give you. one, what's go on here? it's what warren buffett calls the need for a more progressive tax system in the united states. the hire you earn, the higher your tax rate. don't take my word, talk to warren buffett. two, we have to change the perverse culture of wall street where the short-term bonus drives everything. it doesn't help american business. how do we help american business? avoid another financial crash. three, if you don't like the tax, give me some other method. >> this has nothing to do with sound public policy. this is posturing on the banks of the potomac. the vote will not come up. it absolutely will not come up. the co-sponsors, jim webb, barbara boxer, both voted for the big bailouts. so this is their form of posturing and penance. it will not see the light of day. it's designed to say, i feel
your pain. >> regard also whether or not it's coming up, why is it a bad idea? >> because, look, i guess if we want to make taxation the defact cobill of atandser for certain classes of people i've got my problems with bonuses too. once you start down the road of taxation, soon it's on everybody for achieving. you can hear that in david's response. >> looking for a progressive tax structu structure. don't you agree the wealthiest pay the most? >> i go back to warren buffett, he says when you 15% capital gains carried interest tax for the wealthiest and 35% for the rest of us -- >> that's different than federal income tax. >> it's a federal tax. >> i'm talking about the federal income tax brackets, that's progressive, right? >> it is progressive and it stops. this bill would do, look, let's take a look at what's wrong with wall street. i challenge mr. hayworth to tell me what happened with the crashes a good thing. he's not going to say that.
the culture of wall street created perverse incentive for a few individuals. it didn't help investor. >> j.d., we decided we were going to rejigger the tax system, lower amount of deductions on 1 million cash so we would align executives' incentives with the shareholder. it led to a lot more options. did we solve anything? every time we try to do this, what do we get? >> whenever you use the taxation system for purposes of punishment it doesn't work out. it's a perverse disincentive. it punishes everybody. i give no quarter to wall street but the fact is what we need to do is quit punishing success. let's reduce taxes, especially in this economic downturn in which we find ourselves. i'm not here to defend wall street or main street -- i'm here to defend main street, i should say. >> good to see you. coming up around the bend --
toyota's troubles keep on accelerating as the california highway patrol officer uses his cruiser to arrest a runaway prius. out of control prius reached speeds more than 90 miles per hour even as the owner slammed on the brakes. he attempted to pass another vehicle when the accelerator popped forward and stuck in place. toyota has a feel specialist to offer assistance. "the washington post" reports that as many as 33 former national highway traffic safety administration officials now work for the automakers. the "post" did its own analysis suggesting regulators who plan to work for the car companies later might go easy on them while working for the government. allen cam, director of highway traffic safety associates, former senior enforcement with nhtsa and a research fellow with the heritage foundation. thank you for joining us. i can see both sides of the
argument. i'm uncomfortable with the resolving door and the favors. on the other hand you're not going to be an oncologist after you work with nhtsa, makes sense you work in the industry that you work in, right? allen, where do you come down? >> well, the revolving door has gotten ridiculous. it's like the invasion of the body snappers, one minute talking to a counselor for an auto company then appointed to an agent policy making position and a couple of years later back representing the company. whose interest do they represent? who are they really a regulator or industry representative? >> james, where do you come down? >> last thing we want is a wall of separation between knowledge and public policy. you want people that know the industry, know how to works. at the same time you want people in industry that know how policies work. >> james, you can see the conflict. you can see the conflict, though. you can see if you're thinking this may be my former employer
on either side, you're going to be conflicted. how do we deal with that? >> you know, it's not that cartoon world of washington that we hear so much of black hats and white hats and people on one side and the other side. i've known lots of people who have worked in industry who moved into government and became aggressive regulators. >> there are people who works at s.e.c. and worked for bernie madoff. >> that's true also. but you know, the incentive, i'm not sure it's to go easy on industry to get a job. i've seen the opposite. industry's more interested in you if you're a tough regulator. >> allen, this looks bad, okay? but do you really think there's federal workers thinking to themselves, i'm going let american driver die because i want to get a good job with toyota? have we seen any allegation of anything like that at all, sir? >> i have been concerned about the politically appointed policymakers at the agency pandering to the industry wanting to later cash in on
their former agency credentials potentially. and there's an intimidation factor. when i was an agency staffer i would go to a meeting concerning a possible safety related defect or ebb forcement matter and attending the meeting across the table my former boss' boss a politically appointed high agency official and now representing the company under investigation. >> wait a minute. sorry to interrupt your script -- i want to find out what work you do now, should you be banned from the industries you used to be an expert on in the federal government? >> i want in a high position where i could determine what investigations could open or close, what rule making should be conducted, whether to issue aileen yent regul lenient regulation. there should be -- >> the crazy libertarian says agencies shouldn't exist. i look at the situation with toyota there were insurance companies that noticed several
years ago, before nhtsa, there was a problem in california. but the insurance company could have done, instead of waiting for nhtsa say, you're going to buy one of these things, we're going to raise presumiums so hi. >> a lot of market solutions. i'm not saying there's no role for regulation, there's a roll for safety regulation but it's not a black and white issue. having team in government that know what's possible, what is helpful, just as there's value in having people in industry that know how government works. it's not either/or. it's not a cold war situation. >> thanks for joining us. i feel like allen was reading there. >> he had his talking point there's. >> reading points. >> i don't know how i feel about that. coming up -- they say sex sells. not as much as it used to, though. but a pretty penny.
for the internet. broad band's going to get more faster because of their new routers. >> time for "food for thought" and sex. talk about sex. sex.com, in 2006, domain name sold for $14 million. the company kaput, that bought it now, up for auction. expecting a bid of $1 million. no word on what porn.com sells for. i think it might be high. >> what kind of business that is? >> you buy it you can do whatever you want with it. >> maybe a website squatter, flippers, bought it like real estate, thought they could turn it. >> now from sex to anger. >> okay. >> tan fastic tory in the "wall street journal" on the six kinds of anger. even got the old rode da showing you the different anger. take a quiz on anger. i'm not an angry person at all. here's the cool thing. noex to it a story on people who destroy the objects l